Homeaway buys VRBO

OTA = Online Travel Agency, which means those sites that sell the booking and take the payment for you.
User avatar
paolo
Posts: 3885
Joined: Thu Jun 17, 2004 1:18 pm
Location: Provence, France
Contact:

Homeaway buys VRBO

Post by paolo »

Homeaway has now bought up its major competitor, VRBO. If you combine the two you get 130,000 listings they say, but that is not true because there will be many who advertise on both.

Is this good or bad for us? Time will tell but my reaction is 'Oh dear'. I am surprised VRBO have given in, there must have been a lot of money on the table, or the owners have just had enough of working too hard.

Now that Homeaway has almost a stranglehold on the US market, let's see what they do to make their money back.
Paolo
Lay My Hat
User avatar
debk
Posts: 1053
Joined: Sat Sep 25, 2004 12:01 pm
Location: Lisbon, Portugal
Contact:

Post by debk »

I was going to post about this, but I was too sad.

Wait and see... :(
debk
User avatar
paolo
Posts: 3885
Joined: Thu Jun 17, 2004 1:18 pm
Location: Provence, France
Contact:

Post by paolo »

debk wrote:I was going to post about this, but I was too sad.
I know the feeling...
Paolo
Lay My Hat
User avatar
debk
Posts: 1053
Joined: Sat Sep 25, 2004 12:01 pm
Location: Lisbon, Portugal
Contact:

Post by debk »

VENTURE CAPITAL

Austin company gets record $160 million investment

Vacation home rental site aims to be biggest in the world.

By Lori Hawkins
AMERICAN-STATESMAN STAFF
Monday, November 13, 2006

A two-year-old Austin company that operates a Web site for renting vacation homes plans to announce today that it has raised $160 million in financial backing, the biggest single private equity investment ever in an Austin company.

The deal is a landmark event for HomeAway Inc., which is using some of the money to buy its chief rival, VRBO.com, the leading online directory for booking vacation properties in the United States.

"This makes us the world's leader in online vacation rentals," said Brian Sharples, chief executive of HomeAway. "If all goes as planned, in the future, people making vacation plans will
say, 'Honey, let's check out HomeAway.' "

The company lists more than 130,000 vacation properties around the world, from cabins to castles, that travelers can rent directly from their owners.

Austin Ventures, Redpoint Ventures and HomeAway founders previously had invested $47 million in the company. The new money came from those investors as well as American Capital Institutional Venture Partners and Trident Capital. Of the money, $100 million is venture capital and $60 million is debt financing.

The deal is the biggest investment in an Internet software or
services firm nationwide this year, according to Standard & Poor's Capital IQ, which tracks investment data.

"This is a very large bet, and one of the biggest that's been made in Austin in a long time," said Phil Siegel, a partner at Austin Ventures. "We see this as a huge opportunity to build a leading company."

For perspective on the size of the HomeAway deal: Twenty-one Austin companies raised a total of $206.8 million in the third quarter, with the largest single amount, $50 million, going to a company that recycles computers.

The deal reflects a significant shift in how venture investors are spending their money. During the dot-com boom, those firms poured billions into untested startups, hoping to hit a few home runs.

Today, after getting hurt when the Internet bubble burst, most
venture investors are taking a more conservative approach, focusing on proven companies with paying customers.

Money is scarcer for true startups.

"The investing landscape has changed, probably permanently," said Kirk Walden of Austin-based Walden Consulting, which works with startups and venture firms. "The story of the entrepreneur with a cool idea getting $10 million to go try it out is definitely the exception this time around."

HomeAway fits the new venture capital wish list: It is run by an experienced executive, it is making money and its market is growing.

"We're not one of those Web 2.0 companies that has never made a penny," Sharples said. "HomeAway is very profitable. It's not one of those high-risk investments."

Sharples, 46, is a software veteran who previously was chief
executive of IntelliQuest Information Group, an Austin-based high-tech market research firm that was sold in 2000.

Austin Ventures had invested in that company. Two years ago, when it decided to look for new opportunities in the Internet, it recruited Sharples to lead the effort.

His team began buying established home-rental Web sites, combining them to form HomeAway.com.

The company's goal is to become the name brand in what is a highly fragmented market. Today, most vacation rental Web sites are mom-and-pop operations, and renters must navigate sites that often offer incomplete information on availability, rates and booking.

A recent boom in vacation home sales in the United States and Europe has increased the supply of places to rent, and the concept, which is still relatively new in this country, is gaining popularity, particularly with affluent travelers.

That's why HomeAway, which has 165 employees, is moving fast. Its purchase of VRBO.com, which stands for Vacation Rentals by Owner, doubles its rental offerings.

HomeAway will use its new venture money to make more acquisitions and expand in Europe, Sharples said.

HomeAway charges property owners an annual fee, ranging from $150 to $600, to list rental information, including photos, property descriptions, prices and booking information. Renters can use the site for free.

Weekly rates for homes listed on its site range from $450 for an
adobe casita in Albuquerque, N.M., to $30,000 for a luxury villa in Morocco.

The goal, Sharples said, will be for HomeAway to make an initial
public offering or be bought out by a larger player. But for now, he said, the focus is on adding properties and drawing renters.

"There are big expectations," Sharples said. "When you put this much money into a company, there's no doubt you're under pressure to perform."

lhawkins@statesman.com; 912-5955
A-two
Posts: 2091
Joined: Mon Oct 25, 2004 10:05 am
Location: USA

Re: Homeaway buys VRBO

Post by A-two »

paolo wrote: Now that Homeaway has almost a stranglehold on the US market, let's see what they do to make their money back.
Do you mean a strangehold on US holidaymaker's searching for places to stay, or US owners listing their properties?

This kind of rapid consolidation of listing sites and snapping up the competitors could be shooting themselves in the foot. The average owner is only looking for about 25 bookings per year, they don't need 100,000 hits per day to do that. What's needed is targeted marketing, not one size fits all. If HA becomes the hub of vacation rentals, and they're sharing links between all the sites, imagine fielding all those inquiries from people who don't look at the calendar? I dropped a large listing site for exactly that reason 2 years ago. Life instantly improved. The level of inquiries was too many to handle, about 100 a week during one peak inquiry period and my calendar at the end of the week did not reflect a commensurate level of bookings. More hits is not the objective.
User avatar
vrooje
Posts: 3202
Joined: Thu Dec 09, 2004 2:48 am
Location: Burgundy, France

Post by vrooje »

Time will tell but my reaction is 'Oh dear'.
I second (no, third, wait, fourth -- whatever, I agree with) that!

So, what comes next -- will they redesign VRBO to make it look prettier, taking a serious risk that it will lose effectiveness along with search engine placement?

And I can't decide whether to be perturbed or relieved at the idea of an IPO. I don't know enough about it, but it certainly smacks of "need money fast." I wonder if they would offer rental owners a piece of the IPO, and whether it would be a good idea to invest in such a site.

When HR and the others were snapped up, I remember thinking something along the lines of "well, at least they didn't get VRBO."
Brooke
User avatar
paolo
Posts: 3885
Joined: Thu Jun 17, 2004 1:18 pm
Location: Provence, France
Contact:

Re: Homeaway buys VRBO

Post by paolo »

Joanna wrote: Do you mean a strangehold on US holidaymaker's searching for places to stay, or US owners listing their properties?
Both, unless they manage to underperform in search engine rankings. It would be hard to with that much critical mass, but you never know, apparently they managed to reduce the effectiveness of the sites they bought previously.
vrooje wrote:When HR and the others were snapped up, I remember thinking something along the lines of "well, at least they didn't get VRBO."
Exactly. At least they didn't get the biggest and the best.
Paolo
Lay My Hat
User avatar
debk
Posts: 1053
Joined: Sat Sep 25, 2004 12:01 pm
Location: Lisbon, Portugal
Contact:

Post by debk »

they managed to reduce the effectiveness of the sites they bought previously
Indeed. The complaints about the changes at Cyberrentals last year were shocking. (If there hadn't been so many from so many different people, I would have thought it was exaggerated whining of the "I don't like change" variety.) Unfortunately, customer service from HA continues to warrant way too many complaints from USA VRowners for my peace of mind.

VRBO has been a good performer for me, one of only two listing sites that I use. I am very worried that HA will muck it up like they did with the other buy-outs. (In fairness though, H-R seems to be remaining fairly stable. They seemed to enter in a strong position which, hopefully, VRBO will also have.)

As for the IPO, what they want for that is a record of growth and clearly increasing profit. (Growth will be tough for, as Paolo mentioned, they don't even have the #s they currently tout due to repeat property listings.)

One major problem with monopolies is that HA may now feel free to set whatever rates they want, along with fees galore, in search of that profit. How did they put it?
there's no doubt you're under pressure to perform
Pressure to perform. Pressure for profits. Hmmmm, where does that money come from? :wink:
debk
User avatar
paolo
Posts: 3885
Joined: Thu Jun 17, 2004 1:18 pm
Location: Provence, France
Contact:

Post by paolo »

This site will be so big it's almost a monopoly. With the clout they will have we can expect some unpleasant developments - maybe even pay-per-enquiry - in the headlong drive for profits galore.

I think they would be smart to keep vrbo and their existing network quite separate. And even smarter not to touch vrbo at all. It looks awful, but it works.
Paolo
Lay My Hat
A-two
Posts: 2091
Joined: Mon Oct 25, 2004 10:05 am
Location: USA

Post by A-two »

debk wrote:Growth will be tough for, as Paolo mentioned, they don't even have the #s they currently tout due to repeat property listings. debk
A while ago I compared listings in my area on CR and VRBO, property by property. VRBO had the most, but roughly 90% were duplicates.
User avatar
Normandy Cow
Posts: 2687
Joined: Sun Nov 28, 2004 7:14 am
Location: Normandy
Contact:

Post by Normandy Cow »

paolo wrote:And even smarter not to touch vrbo at all. It looks awful, but it works.
This comment interests me. I have thought about VRBO a few times but never signed up with them, because of the way it lists properties. I always wonder how anyone would find my property, as it is in France, and everything seems to be listed higgledy piggledy.

I can understand that VRBO probably works for people with properties in the states - but how does it perform for French properties? How many of you actually advertise with VRBO, and does it work for France?

Also, I can understand the worry about this huge new conglomerate. If they are going to merge all the properties into one big listing site, then I think we will all suffer in the same way that I did when frenchConnections got so huge that nobody could ever find my property...

Small is Beautiful!
User avatar
paolo
Posts: 3885
Joined: Thu Jun 17, 2004 1:18 pm
Location: Provence, France
Contact:

Post by paolo »

CatherineS wrote:
paolo wrote:I can understand that VRBO probably works for people with properties in the states - but how does it perform for French properties?
It has always worked brilliantly and outperformed all other sites by a mile. But that is for a part of France that is on the US tourist trail, and 80% of my bookings are from Americans. It will not necessarily work for all of France.
Paolo
Lay My Hat
User avatar
Big Sis..
Posts: 8059
Joined: Mon Feb 19, 2007 5:31 pm
Location: Torrevieja and Norfolk
Contact:

Post by Big Sis.. »

Hi Paolo, :D


On an earlier posting you said that VRBO works but looks awful....
I wondered what first attracted you to it in the first place and made you realise it would be a good performer for you even though you didnt like the look of it .
User avatar
paolo
Posts: 3885
Joined: Thu Jun 17, 2004 1:18 pm
Location: Provence, France
Contact:

Post by paolo »

Ros wrote:On an earlier posting you said that VRBO works but looks awful....I wondered what first attracted you to it in the first place and made you realise it would be a good performer for you even though you didnt like the look of it .
I started using them because they did well on relevant searches on Google - the same method I always use:

How to find the best rental listing sites

Of course back then there were far fewer sites and the good ones stuck out more prominently on search results than they do now.
Paolo
Lay My Hat
Paul Carmel
Posts: 3836
Joined: Tue Dec 07, 2004 12:25 pm
Location: Palma Mallorca & Greece
Contact:

Post by Paul Carmel »

This kind of thing used to go on all the time in my last line of work with very predictable results

Friday night - Boss of happening little company announces to his staff that he has sold the family jewels to a very large organization. He also tells them they are the backbone of his company and he has fought long and hard with the new company to keep them all in employment. And, because he is such a nice guy he even negotiated a 5% pay rise (while he walks off with a million or so in the bank, stocks & shares in the new company etc)

He then says: to celebrate the beers are on me tonight so off we go to TGI Fridays with a skip and a jump, and hurrah for the boss!

Next morning one bright member of staff realises they have been sold down the river! and a long island iced tea and 10p
extra a week just won't cut it;

So come Monday morning he/she hands in their notice and starts up a new company doing exactly the same, but with a promise not to behave like the big boys.........words like boutique and independent happening company start to be bandied about, And before long the company looks great - it's not just a one man band, there are 5 more staff, who are paid so badly it's embarrassing. Behind the scenes the company is in big financial doodoo. So then the big nasty corporation comes knocking and whole process starts its predicable cycle all over again!

What can we do about it? Not a lot really, the one thing we can do is not to give them our money.......at the end of the day it is us that keeps them afloat..........if anyone could be bothered to contact every owner on a site it would be possible to have a voice..............over to someone else


Anyway rant over!
Cheers
PC
Post Reply